CTC full Form
Cost to Company
What is the Full Form of CTC?
CTC full form in salary
A job seeker always looks out for a hefty pay package. Many times after going through the selection process, the HR executive put forth the CTC or cost to the company before the prospective employee.
A new job seeker often gets overwhelmed by looking at the large figure as he thinks that it is the salary that he will be taking home. Then comes the payday and he gets a shock to see a lesser amount falling in his hand. So he wonders, “Where did that other money go?”
What is CTC?
CTC Full Form
CTC means Cost To Company and in simple terms, it means the expenses incurred by the employee’s work tenure by the employer that is the company. Thus, a CTC shows the amount of money the company is willing to spend annually on the employee to retain his services.
There are many factors added to come to a final CTC figure. The employee has a base salary to which the company adds benefits and perks. These include the dearness allowance, medical allowance, house rent allowance, health insurance, entertainment, and conveyance allowance, and the company’s contribution towards the provident fund.
Other things that may be added to the CTC are the performance bonus as well as overtime allowance.
Apart from the basic salary of the employee, these are the different perks given by the company and thus, they are termed as “Cost to Company”.
The CTC can be manipulated by the employee for his benefit by converting many indirect allowances to direct allowance. We will talk about this in detail later.
But it is necessary to understand that cost to the company and take-home salary do not mean the same thing and a person seeking a job should learn this difference before accepting the post.
Difference between take-home salary and CTC & CTC Full Form
As mentioned earlier, CTC is the total of all the benefits added to your basic salary to give a gross salary and then adding the company’s contribution towards the provident fund, thus giving the final cost to the company.
Many of the above-mentioned components that contribute towards building the CTC (various allowances, bonuses, etc) are taxable and there is income as well as the professional tax to be cut.
Therefore, what you get in your hand after calculating all the deductions and taxes is the “Take Home Salary” or the Net Salary.
A person’s payslip always gives the details about the breakup of funds and explains at a glance your income and your deductions to give a net amount that you are entitled to take home that month.
Amongst the deductions are also considered the pay cuts on account of unpaid leaves or loans taken from the company, as the EMI is deducted from the monthly pay and finally, the employee’s contribution towards the provident fund.
Thus, as we can see, CTC gives a wider picture of the expenses incurred during the year on a particular employee and the Net Salary is the money the employee gets per month after all the possible deductions have been made.
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